NBN Co was not fit for purpose: Scales report

Cost blowouts and delays in the rollout of the national broadband network show that infrastructure projects - including a second Sydney airport - should be subject to a public cost-benefit analysis, the country's peak infrastructure body says.

In a review of the policy process that led to the creation of the network, former Productivity Commission chairman Bill Scales said all public infrastructure projects worth over $1 billion should be subject to a cost-benefit analysis, with the results made public before the project starts.

Bill Scales has recommended all projects worth more than $1 billion be subject to a cost-benefit analysis before they begin. Photo: Penny Bradfield/File

All infrastructure projects promised at an election should also be costed by the Productivity Commission or Infrastructure Australia, Mr Scales recommended.

The findings were backed by Communications Minister Malcolm Turnbull, who said they would lead to ''a higher standard of professionalism and diligence'' in policy making. The government has a policy that spending projects over $100 million should have a cost-benefit analysis, but these are not necessarily made public.

''The more you can get transparency and rigour into major projects the better off you will be,'' Infrastructure Partnerships Australia chief executive Brendan Lyon said. ''[The NBN] has not been a success. The project has been running behind time and above cost.

''We need to look at how large projects such as this could be better managed.''

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Mr Lyon said it would be appropriate to put the Badgerys Creek project through a cost-benefit analysis before starting it.

''A cost-benefit analysis is not the be all and end all but it is a very powerful tool in terms of assessing projects - something like an airport lends itself to a cost-benefit assessment.''

A spokesman for Infrastructure Minister Warren Truss said: ''All infrastructure projects costing over $1 billion dollars will have a positive cost-benefit analysis if they are to proceed with government funding.

''Detailed planning for Western Sydney airport is now under way - this will include the development of a detailed business case and cost-benefit analysis.''

The government is considering the findings of a Productivity Commission report on infrastructure delivery tabled last month.

In his report Mr Scales found the Rudd government used a ''rushed, chaotic and inadequate'' public policy process to develop the NBN.

The decision to establish a new company, NBN Co, to roll out the broadband network to 98 per cent of homes was made after just 11 weeks of consideration.

''NBN Co was not fit for purpose,'' the report says.

''It was a start-up company given a job that only a well-functioning, large and established telecommunications company would have been able to undertake in the allotted time frame.''

Former communications minister Stephen Conroy, who oversaw the development of the NBN, accused Mr Turnbull of hypocrisy.

Mr Turnbull launched a $10 billion water reform plan when he was environment minister in the Howard government without releasing a cost-benefit analysis, he said.

Treasurer Joe Hockey did not respond to questions on Mr Scale's recommendations.